Home price insanity: $2.6 million for 900 square feet

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via CBSnews:

If you’re looking for homes in Palo Alto, Calif., our sympathies to your bank account. In the most recent example of home prices gone bonkers, a two-bedroom, one-bathroom cottage has been listed for $2.6 million.

At 900 square feet, that means you’d be paying more than $2,800 per square foot — an eye-popping number more typical of a luxury penthouse in Manhattan than a suburban neighborhood. The cottage has a detached garage, but only outside basement access for the laundry room. There have not been any offers yet, though realtor Laura McCarthy says she had a number of showings.

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“If you look globally, London has remained strong. New York has remained strong. We have a lot here. We have people coming in from all over the world,” McCarthy told KPIX.

The median home price in the U.S. rose 8.7 percent to $215,600 in April compared with a year earlier, Zillow reported last month. In San Jose, Calif., home values rose 26 percent in April to a median $1.26 million

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Higher mortgage rates add to the challenge of finding an affordable home, and some buyers may be rushing to make a purchase in case the Federal Reserve — which hiked its key interest rate by 0.25 percent last Wednesday — boosts rates further this year. Fixed rates for 30-year mortgages are now at about 4.62 percent, hovering near their highest level since May 2011, Freddie Mac reported on Thursday.



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